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Do brain drain and poverty result from coordination failures?

  • de la CROIX, David
  • DOCQUIER, Frédéric

We explore the complementarities between high-skill emigration and poverty in developing countries. We build a model endogenizing human-capital accumulation, high-skill migration and productivity. Two countries sharing the same characteristics may end up either in a “low poverty/low brain drain” path or in a “high poverty/high brain drain” path. After identifying country-specific parameters, we find that, for a majority of countries, the observed equilibrium has higher income than the other possible one. In 22 developing countries (including 20 small states with less than 2 million inhabitants), poverty and high brain drain are worsened by a coordination failure. For 25 other countries, a radical worsening of economic performances is feasible. These results are fairly robust to identification assumptions and the inclusion of a brain-gain mechanism.

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File URL: http://dx.doi.org/10.1007/s10887-011-9073-2
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Paper provided by Université catholique de Louvain, Center for Operations Research and Econometrics (CORE) in its series CORE Discussion Papers RP with number 2387.

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Handle: RePEc:cor:louvrp:2387
Note: In : Journal of Economic Growth, 17(1), 1-26, 2012
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